Need help...Bid Bonds

[Big D 40]

I have a 2 year old business that is growing. We recently aquired a large job of over $200,000. We are needing to aquire a bid bond, but are having a bit of trouble since our largest job up to this point has been $30,000. Does anyone have any experience with these or suggestions. This is a great job in which I know that we can handle it, we want to grow but it seems like it is a difficult way to get going. thanks for any help!

 

[bkludecke]

If you need a bid bond, you probably will also need a performance bond. The 1st ones are always hard to get. You'll probably have to put up your house (equity) and your 1st born to get going.

 

[lowryder88h]

bond

bond

First time is the hardest as said before they'll want you to put up or shut up. You'll will probably use you dwelling for collateral. After this one it is easy to get as long as one performs. LOL

 

[satcom]

You said you recently aquired a large job, did you commit to a contract before any bonding was in place?
When we had 10 years in business, they looked at it as a risk, you can get a bond, but, as the others noted, be prepared to put your home and any assets you own on the line, unless your business has assets, this is one of the reasons many post on here, the value of building a business with value, it allows for growth.
Another issue is did you bid the job right, cover all your overhead and operating expenses, with eniough profit to at least cover the bonding costs.
They will also check your current insurances in place, if the liability and comp is not up to their standards, you may need to up your insurance.

 

[chrsb]

I am in the process of getting a surity bond and it is no fun.
They want to know everything about you. When you are all done filling out the forms you know what kind of financial situation you are in, luckly mine was in the black.

 

[chrsb]

You said you recently aquired a large job, did you commit to a contract before any bonding was in place?

He is asking about a bid bond I would assume no contract is awarded yet, if he gets the job he will have so many days to secure the performance bond.

 

[Big D 40]

thanks for the responses

thanks for the responses

I have been awarded the contract but on the contigency that the bid bond is in place. We have already been turned down by 2 bond under writers. There has to be a way to get our foot in the door. We are sure of the figures and that our profits and overhead are in line. It is just that we are a small company and only been in business for 2 years. Our potential should not be held back because of our lack of money. I was hoping that someone knew about another bonding agency that is willing to take the risk. thanks

 

[thinfool]

My bonding company will only issue a bid bond if they are also going to execute a performance bond. (provided I am the successful bidder)

 

[thinfool]

I have been awarded the contract but on the contigency that the bid bond is in place.

I think you mean a performance bond.

We have already been turned down by 2 bond under writers. There has to be a way to get our foot in the door. We are sure of the figures and that our profits and overhead are in line.

Have you considered a joint venture with another company who could acquire the bonding?

I know one EC who regularly bids under the name of an excavating contractor who can be bonded, whereas the EC is not yet able to satisfy the underwriters.

 

[satcom]

Our potential should not be held back because of our lack of money. I was hoping that someone knew about another bonding agency that is willing to take the risk. thanks

Stay with your smaller jobs until your able to build some assets in the business, the service fees for a 200,000 bond would be about $8,000 or less for an established business with assets, a new business the rates could be much higher, can you get a letter of credit from a commercial bank, and see if they can help you with the bond.

 

[dduffee260]

Have you talked with the GC about bonding you? Sometimes they will bond a sub for 3 1/2% or so. Their bond cost them 1 1/2% so they will be making some off you.
Or like someone else suggested get a dirt, mechanical or some other contractor to help bond you. Only problem there is that all the paperwork, the check and everything goes to them first then you have to trust them to pay you. If they don't then you file on their bond. So a contract would be mandatory for something like that.
Payment and performance bonding can be tough to get, the first one can be that is. We have to send in quite a bit of paperwork just to keep our bonding capacity up.